In a note released on Friday, analysts at the German bank warn that dry and warm weather in Europe hits hydropower production – Norwegian hydro generation in January was almost a third lower year on year.
But it also hampers the transport of fuels, with low water-levels on the Rhine – where barges are operating at as little as 30% of normal capacity – making it difficult to supply power plants with fuel oil and coal. Meanwhile, barge rates have nearly trebled since December, Deutsche Bank says.
Of particular concern are wheat prices – Europe is the second largest exporter of wheat, after the US, accounting for 18% of global wheat exports. France, Germany and the UK represent 55% of EU wheat production.